lancelot102908
On the homepage
Gas lines
Out There
Club Outdoors
Food shelf
Five funds blame Petters as they file bankruptcy
Print this story
E-mail this story
Save to del.icio.us
Share on Facebook
Share on Digg
Minnesota business by the numbers
See Minnesota's top earning companies, CEOs and non-profits
Related Content
More from Business
Dominoes continue to fall in the fraud case against Twin Cities businessman Tom Petters.
Five investment funds run by Lancelot Investment Management, a hedge fund in Northbrook, Ill., that sank about $1.5 billion into the Petters group of companies, have now gone belly-up and blame Petters directly for their insolvency.
The funds and their subsidiaries filed for Chapter 7 liquidation in U.S. Bankruptcy Court in Chicago Oct. 20.
The Petters companies are in bankruptcy in Minnesota, and Lancelot Investment is the largest creditor in the Petters case. It's one of several hedge funds that invested in Petters' companies. The Lancelot funds invested nearly all of their $1.8 billion in assets with Petters' business entities, court documents show.
Petters, whose holdings include Polaroid and Sun Country Airlines, is fighting federal charges of mail and wire fraud, money laundering and obstruction of justice related to what authorities say is a fraud scheme exceeding $3 billion.
Michael Terrien, an attorney for a trustee for the Lancelot bankruptcies, told U.S. Bankruptcy Judge Gregory Kishel in St. Paul Tuesday that he suspects that other funds may be insolvent as a result of the alleged fraud. He made his comments at a status conference in the consolidated bankruptcy cases involving Petters' companies.
Gregory Bell, president of Lancelot Investment Management, told investors in an e-mail Oct. 21 that management filed the Chapter 7 bankruptcies because the funds' creditors wouldn't release enough assets from the funds to pay for other ways to recover their investments.
"We are disappointed that the massive fraud perpetrated by Petters Co. has now claimed our funds, and each of our investors, as its victims," Bell said in the note.
Jennifer Bjorhus • 612-673-4683
Recent Business stories
Watchmaker Swatch says full-year 2009 net income dropped 9 percent - October 28, 2008
Watchmaker Swatch says full-year 2009 net income dropped 9 percent - Swatch Group AG, the world's largest watchmaker, said Tuesday that net income dropped 9 percent last year, blaming higher gold prices and lower exports due to the global economic downturn and the strong Swiss franc. More
- Target pulls Valentine's Day bears over lead levels
- Software firm struggles to break into the big leagues
- Obama says both sides have to give on health care
- Recall erodes Toyota trust, resale prices
- HR and Facebook: It's complicated
- World's tallest tower closed a month after opening
- Downtown Minneapolis: 'Pretty strong' as recession ebbs
Comment on this story | Read all 26 comments | Hide reader comments